12 October 2012

The latest round of property cooling
measures is expected to make its impact felt on the high-end residential
sector, with developers facing more overhang in the short term.

Prime properties in the core central
region (CCR) in particular can expect demand to slow further, given the higher
downpayment required (for investors affected by the lower loan-to-value ratio)
or higher monthly mortgage instalments, which can be expected to increase 13-21
per cent depending on tenure, said a report released Thursday.

The high-end segment could also see
vacancy risks arising from weak rental demand and unsold units, said the report.

While demand for mass market homes
too might be affected in the near term, headline prices should remain sticky. This
is because system vacancy rates stand at 6.8 per cent, well below the long-term
average of 7.9 per cent. In addition, developers may choose to delay property
completion, supporting shorter-term prices.

That being said, demand is expected
to fall in the near term, with some buyers put off by the negative carry, as a
shorter loan tenure translates to higher monthly instalments - which may prove
unattractive if the rental income received is insufficient to cover the monthly
instalments.

In addition, some investors may be
inclined to "downtrade", opting for longer-tenure loans (capped at 35
years), but buying properties close to half the ticket size of what they would
have been able to afford earlier.

Sales of new private homes have been
brisk in the past year for projects in neighbourhoods like Pasir Ris and
Punggol.

And some industry players said the
Hillview area, located in the western part of Singapore, could be the next
up-and-coming spot with more projects lined up.

The Hillier - a mixed development
project at Hillview Avenue - is one of several new offerings in the area. It
has seen strong take-up, with 96 per cent of the total number of units sold.

DWG's senior manager for training,
research and consultancy, Lee Sze Teck, said: "It is a private residential
enclave, so it will attract quite a fair bit of people who want the peace and
tranquility to stay there. Of course, the traffic network there is not so
built-up yet but with the upcoming Downtown MRT line, it will improve the
network in the area."

Analysts predict that Hillview, along
with nearby Cashew, Chestnut and Diary Farm areas, could garner more interest. It
is estimated that there would be over 2,000 new units in these areas in the
next five years.

These projects include The Hillier
(528 units), Eco Sanctuary (483 units), Tree House (429 units), Foresque
Residences (496 units) and an upcoming condominium by Kingsford Development
which could yield up to 500 units.

Market watchers said prices of new
projects have climbed and could encourage developers to put in more optimistic
land bids.

For example Foresque, when it was
launched, it was about S$1,200 per sq ft (psf) and that set the new benchmark.
When The Hillier came in, it is now on average transacting between S$1,500 psf
and S$1,600 psf.

Another area with bright prospects in
the long term is Woodlands, located in the northern part of Singapore. Property
analysts said this optimism is driven by two key factors - better connectivity
and increasing commercial activities in the area.

The existing Woodlands MRT station
will link up with the upcoming Thomson Line which will be fully completed in
2021.

The median price of non-landed
private homes in Woodlands rose by 6.9 per cent in the third quarter this year
from the first quarter of 2011. This is slightly lower than the 7.2 per cent
increase in overall median price of similar homes in the mass market segment
over the same period.

And there should be more upside ahead
when the potential of the area is realised.

Jurong East is also earmarked as a
property hot spot in the next 10 to 15 years, as the area is slated to be a new
commercial hub under the Urban Redevelopment Authority's Masterplan 2008.

A firm linked to the Hotel 81 chain
has put in the top bid in a nine-way contest for a well-located development
site near Lavender MRT station.

The $331.3 million bid for the 0.84ha
site, available for hotel, commercial and residential use, was significantly
higher than market expectations.

Experts had earlier tipped the price
to come in between $650 and $930 per sq ft per plot ratio (psf ppr). But the
top offer, submitted by Hotel 81-linked Forward Land, works out to a higher
$994 psf ppr.

Dennis Wee Group's senior manager of
training, research and consultancy, Mr Lee Sze Teck, noted that the buoyant
tourism industry has led to higher demand for hotel rooms and room rates -
hence the strong bids for the site.

"The successful bidder could be
looking at building a four-star hotel on the site," he said, noting that
Forward Land had lost out on two previous hotel tenders in the past year.

Another analyst added that the site
is "favourably located near Lavender MRT station". "Shopping,
eating and other amenities are all nearby so hotel guests or residential
occupiers would find the location very convenient," he said.

The real estate investment sales
market in Singapore surged 19.6 per cent in the third quarter from the previous
three months, recording a total transaction value of almost S$9 billion, the
highest quarterly total seen since the first quarter of last year, a property
consultancy said Thursday.

The residential segment recorded
S$3.7 billion of transactions in the investment sales market, up 26.7 per cent
from the previous three months, and making up 41 per cent of the overall value
in the third quarter.